AEROSPACE PROPULSION 34

2010 ANNUAL REPORT

An alphabet comprising letters formed by products and components from our three core businesses: this graphic language, invented by Safran, refl ects the passion for high technology shared by over 54,000 Safran employees throughout the world. Safran is a leading international high-technology group and a Tier-1 supplier of systems and equipment for aerospace, defense and security. Operating worldwide, the Safran group has more than 54,000 employees and generated sales of 10.8 billion euros in 2010. Through its global presence Safran not only enhances its competitiveness, but also builds industrial and commercial relations with the world s leading prime contractors and operators, while providing fast local service to customers around the world. Working alone or in partnership, Safran holds world or European leadership positions in its core markets. SAFRAN GROUP 02 MESSAGE FROM THE CEO 04 CORPORATE GOVERNANCE 06 SAFRAN AT A GLANCE 08 FINANCIAL AND OPERATING HIGHLIGHTS 12 INVESTOR INFORMATION STRATEGY 14 RESEARCH DEVELOPMENT IMPROVEMENT & TECHNOLOGY 22 INITIATIVES 28 18 AEROSPACE PROPULSION 34 AIRCRAFT EQUIPMENT 38 DEFENSE SECURITY 42 HUMAN RESOURCES 46 CORPORATE RESPONSIBILITY 52 HEALTH, SAFETY, ENVIRONMENT 54 PATRONAGE 56 BOAT SPONSORSHIP 1

MESSAGE FROM THE CEO MESSAGE FROM THE CEO Even stronger and more integrated, Safran is ready to pursue its growth under optimum conditions. JEAN-PAUL HERTEMAN 2010 was much more than just a year of transition for Safran. It also marked the end of a diffi cult period, as the rebound in air traffi c was confi rmed and our customers reaffi rmed their confi dence in us. Safran is now stronger, and is ready to pursue its development under optimum conditions. All of the Group s businesses recorded good performance, with certain emblematic achievements that are worth emphasizing. The highlight in the aerospace propulsion market was the confirmed breakthrough of the LEAP-X, successor to the CFM56, as the aircraft. In the Defense sector, our optronics equipment scored major business wins, while our security business continued to grow at a sustained pace, in line with Safran s corporate strategy. Our selection on the vast Indian program to assign every resident a unique biometric identifi cation number shows that we have the capabilities needed to meet our ambitious goals. This is the largest program of its type in the world, covering more than 1.3 billion persons. We are also pursuing our targeted acquisition policy, most recently with the planned addition of L-1 Identity Solutions. At the same time, we continue to build and perfect our organization. We are pooling our support functions, and we have rolled out a new visual identity. With full confi dence in the dynamic performance of our markets, plus signifi cant investment capacity, we are modernizing our industrial facilities in depth. For example, we opened four major plants in 2010, both in France and abroad. Sure of our business model and our outstanding people, and with a clear vision of market trends, Safran expects sales to increase in 2011 by at least 5%, while our powerplant of choice on single-aisle jetliners. Safran s performance has recorded a recurring operating income will advance at The propulsion system developed by Safran clear improvement, once again demon- least 20%. and partner GE has already been chosen for strating the strength of our business the Comac C919, built in China, and for the model. Our sales increased 3% last year to JEAN-PAUL HERTEMAN Airbus A320neo. At the same time, our nearly 11 billion euros, and our operating Chief Executive Offi cer, Safran acquisition of SNPE Matériaux Energétiques income rose by 20%. Each of our businesses, (SME) will enable us to develop a global supported by the highly effective Safran+ champion in solid propulsion for space. The improvement program, contributed to these Aircraft Equipment branch confirmed its good results. Our share price refl ects investor recovery, and has reorganized to meet the confi dence in the Group s fundamentals: in challenges facing us in the coming decades, fact, we practically doubled our stock market in particular the advent of more electric valuation during the year. 2 3

GOVERNANCE AT DECEMBER 31, 2010 SUPERVISORY BOARD EXECUTIVE BOARD The Safran Supervisory Board met eight times in 2010, in particular to approve the consolidated and non-consolidated fi nancial statements and to read the Executive Board s quarterly reports. It comprises 17 members. Francis Mer, Chairman Michel Lucas, Vice Chairman Luc Oursel (representing the company Areva) Pierre Aubouin Christophe Burg François de Combret Armand Dupuy Jean-Marc Forneri Patrick Gandil Yves Guéna Christian Halary Shemaya Lévy Michèle Monavon Jean-Bernard Pène Jean Rannou Michel Toussan Bernard Vatier Jean-Paul Herteman, Chairman Olivier Andriès, Executive Vice President, Defense - Security Dominique-Jean Chertier, Executive Vice President, Social, Legal and Institutional Affairs Xavier Lagarde, Executive Vice President, Quality, Audit and Risk Management Yves Leclère, Executive Vice President, Aircraft Equipment Ross MCInnes, Executive Vice President, Economic and Financial Affairs Marc Ventre, Executive Vice President, Aerospace Propulsion GOVERNANCE SUPERVISORS: Georges Chodron de Courcel Pierre Moraillon GOVERNMENT COMMISSIONER: Louis-Alain Roche SUPERVISORY BOARD COMMITTEES The Supervisory Board has designated three committees to prepare its discussions, spotlight major issues and submit proposals. STRATEGY COMMITTEE The Strategy Committee gives its opinion on the Group s major strategic objectives and the development policy proposed by the Executive Board. It examines plans for strategic agreements and partnerships, as well as acquisitions and operations affecting the Group s structures. Since April 14, 2010, the committee comprises five members: Francis Mer (chairman), Pierre Aubouin, Christophe Burg, Luc Oursel and Jean Rannou. AUDIT COMMITTEE The Audit Committee examines fi nancial statements and accounting procedures. In addition, it reviews requests submitted by the Management Board to the Supervisory Board for authorizations concerning signifi cant acquisitions or divestments, as well as capital increases. The committee has fi ve members: Shemaya Lévy (chairman), Pierre Aubouin, Michel Lucas, Jean Rannou and Michel Toussan. APPOINTMENT AND REMUNERATION COMMITTEE The Appointment and Remuneration Committee assists the Supervisory Board in selecting members and corporate offi cers, and draws up recommendations concerning the compensation of corporate officers. The committee has six members: Michel Lucas (chairman), Pierre Aubouin, Christophe Burg, François de Combret, Jean-Marc Forneri and Bernard Vatier. CORPORATE OFFICERS Jean-Paul Herteman, Chief Executive Offi cer Olivier Andriès, Executive Vice President, Defense Security Emeric d Arcimoles, Executive Vice President, International Affairs L Jean-Pierre Cojan, Executive Vice President, Strategy and Development Xavier Lagarde, Executive Vice President, Quality, Audit and Risk Management Yves Leclère, Executive Vice President, Aircraft Equipment Dominique-Jean Chertier, Executive Vice President, Social, Ross MCInnes, Executive Vice President, Economic and Financial Affairs Legal and Institutional Affairs Marc Ventre, Executive Vice President, Aerospace Propulsion 4 5

CORPORATE GOVERNANCE AS OF APRIL 21, 2011

BOARD OF DIRECTORS CORPORATE MANAGEMENT Safran s Annual General Meeting of Shareholders was held on April 21, 2011 at L Espace Grande Arche, Paris-La Défense, under the chairmanship of Francis Mer, Chairman of the Supervisory Board. The meeting approved the change in corporate governance to a structure solely based on a Board of Directors, and appointed the following members of the Safran Board of Directors: Jean-Paul Herteman, Chairman and CEO Francis Mer, Vice Chairman Pierre Aubouin Marc Aubry Giovanni Bisignani Christophe Burg Jean-Lou Chameau Odile Desforges Jean-Marc Forneri Christian Halary Xavier Lagarde Michel Lucas Elisabeth Lulin Laure Reinhart Michèle Rousseau Board Advisor: Caroline Grégoire Sainte Marie Jean-Paul Herteman, Chairman and CEO This type of corporate governance offers a more streamlined organization than the previous structure (15 members instead of 20), and is also more diversifi ed, since it now includes fi ve women on the Board, as well as two international fi gures. Dominique-Jean Chertier, Deputy Chief Executive Offi cer / Corporate Offi ce Ross McInnes, Deputy Chief Executive Offi cer / Finance Marc Ventre, Deputy Chief Executive Offi cer / Operations BOARD COMMITTEES The Board has designated three committees to prepare its discussions, spotlight major issues and submit proposals. STRATEGY AND MAJOR PROJECTS COMMITTEE The Strategy and Major Projects Committee issues opinions on the Group s major strategic objectives and the development policy proposed by corporate management to the Board of Directors. Committee members: Francis Mer (Chairman), Pierre Aubouin, Giovanni Bisignani, Christophe Burg, Odile Desforges, Xavier Lagarde and Laure Reinhart. AUDIT AND RISK MANAGEMENT COMMITTEE The Audit and Risk Management Committee examines fi nancial statements and monitors questions concerning the generation and control of fi nancial and accounting information. In addition, it oversees the effi ciency of the company s internal control and risk management systems. Committee members: Jean-Marc Forneri (Chairman), Pierre Aubouin, Elisabeth Lulin, Michèle Rousseau and Caroline Grégoire Sainte Marie. NOMINATION AND REMUNERATION COMMITTEE The Nomination and Remuneration Committee assists the Board in selecting members and corporate offi cers, and draws up recommendations concerning the compensation of corporate offi cers. Committee members: Michel Lucas (Chairman), Pierre Aubouin, Giovanni Bisignani, Christophe Burg and Francis Mer. Along with the change in corporate governance, Safran has also modifi ed its corporate management structure. The aim is to continue to knock down operational barriers between Group companies, by creating an Operations division, and to further energize innovation across all entities by creating a Transformation division. Jean-Pierre Cojan, Executive Vice President / Strategy Bruno Cotté, Executive Vice President / International Yves Leclère, Executive Vice President / Transformation Philippe Petitcolin, President / Defence-Security

COMPANY CHAIRMEN Pierre Fabre Chairman and CEO, Snecma Olivier Andries Chairman and CEO, Turbomeca Philippe Schleicher Chairman and CEO, SME Jean-Luc Engerand Chairman and CEO, Snecma Propulsion Solide Yves Prete President and CEO, Techspace Aero Vincent Mascré Chairman and CEO, Aircelle Alain Sauret Chairman and CEO, Messier-Bugatti-Dowty Olivier Horaist Chairman and CEO, Hispano-Suiza Karen Bomba Chairman and CEO, Labinal Philippe Petitcolin Chairman and CEO, Sagem Jean-Paul Jainsky Chairman and CEO, Morpho SAFRAN 2, boulevard du Général-Martial-Valin 75724 Paris Cedex 15 France Phone: +33 (0)1 40 60 80 80 www.safran-group.com

SAFRAN AT A GLANCE AEROSPACE PROPULSION AIRCRAFT EQUIPMENT DEFENSE - SECURITY 5,604 MILLION 2,834 MILLION SALES 59% COMMERCIAL AIRCRAFT ENGINES SALES 50% LANDING SYSTEMS DEFENSE SECURITY 1,240 MILLION 1,041 MILLION SALES SALES SAFRAN AT A GLANCE 12% MILITARY AIRCRAFT ENGINES 18% HELICOPTER ENGINES 11% BALLISTIC MISSILE AND SPACE PROPULSION 25% ENGINE SYSTEMS AND EQUIPMENT 22% ELECTRICAL SYSTEMS AND ENGINEERING 3% OTHER EQUIPMENT 52% OPTRONICS 41% AVIONICS 7% ELECTRONICS AND SAFETY-CRITICAL SOFTWARE 55% IDENTIFICATION 24% E-DOCUMENTS 21% DETECTION COMMERCIAL AIRCRAFT ENGINES No.. 1 worldwide (mainline commercial jets with over 100 seats, in partnership with GE) MILITARY AIRCRAFT ENGINES No. 4 worldwide HELICOPTER TURBINE ENGINES No. 1 worldwide SPACE ENGINES No. 2 worldwide in liquid propulsion No. 1 in Europe for solid propulsion LANDING GEAR No. 1 worldwide WHEELS AND CARBON BRAKES No. 1 worldwide (mainline commercial jets with over 100 seats) AIRCRAFT ENGINE NACELLES Top two worldwide AIRBORNE POWER ELECTRONICS A world leader AIRCRAFT WIRING A world leader HELICOPTER FLIGHT CONTROLS No. 1 worldwide INERTIAL NAVIGATION No. 3 worldwide No. 1 in Europe OPTRONIC SYSTEMS No. 1 in Europe TACTICAL UAVS No. 1 in Europe BIOMETRIC ID DOCUMENTS No. 1 worldwide AUTOMATED FINGERPRINT IDENTIFICATION SYSTEMS (AFIS) No. 1 worldwide COMPUTED TOMOGRAPHY EXPLOSIVE DETECTION SYSTEMS No. 1 worldwide 6 7

2010 FINANCIAL AND OPERATING HIGHLIGHTS FINANCIAL AND OPERATING HIGHLIGHTS Safran posted adjusted sales of 10.8 billion euros for 2010, up 3% over 2009. Adjusted recurring operating income came to 878 million euros, equal to 8.2% of sales. This result was based on a hedging rate of $1.44/euro, slightly more unfavorable than in 2009. One-time expenses, all related to the costs of mergers and acquisitions, amounted to 13 million euros, and adjusted operating income was 865 million euros. The Group s share of adjusted net income jumped 29% over the previous year to 508 million euros, or 1.27 euros per share. SALES (millions of euros) Safran s consolidated sales increased moderately in 2010, to 10,760 million euros, from 10,448 million euros in 2009, for a growth rate of 3%. On an organic basis, Group sales decreased slightly, by 1%. 10,448 2009 2010 10,760 SALES BY SECURITY BUSINESSES 904 1,041 SALES BY BUSINESS SECTOR The 312 million euro rise in sales is primarily due to an increase of more than 15% in defense business, especially in optronics equipment, and the security sector, mainly due to acquisitions. While the sale of original equipment for aircraft declined somewhat, mainly due to a late ramp-up in Airbus A380 and Boeing 787 production, the sales generated by services remained stable. (millions of euros) Between 2007 and 2010, the compound average growth rate was about 15%. Including the acquisitions of Printrak and GE Homeland Protection in 2009, the average growth rate would be about 21%. 695 481 2007 2008 2009 2010 Sales restated according to 2008 scope of consolidation (excluding electronic payment business) and excluding Ivory Coast business Sales from acquisitions (Printrak, GE Homeland Protection) 10% SECURITY 12% DEFENSE 52% AEROSPACE PROPULSION 26% AIRCRAFT EQUIPMENT 8 9

FINANCIAL AND OPERATING HIGHLIGHTS NET INCOME GROUP SHARE (adjusted data, millions of euros) 395 508 2009 2010 NET PROFIT PER SHARE (euros) 0.99 2009 2010 1.27 SHARP RISE IN DIVIDEND (euros) The proposed payment of a dividend of 0.50/share is subject to a vote by the Annual General Meeting of Shareholders on April 21, 2011. The planned total payout will be about 200 million euros. OPERATING INCOME (millions of euros) 729 2009 2010 0.38 878 0.50 NET CASH POSITION (millions of euros) 2009 2010 (498) 24 NET INCOME The Group s share of adjusted net income rose by 29% on an annual basis. It stood at 508 million euros for 2010, or 1.27 euros per share, compared with net income of 395 million euros on a restated basis (0.99 euros per share) for 2009. BALANCE SHEET AND CASH POSITION At December 31, 2010, the Group s net cash position stood at 24 million euros, compared with a net debt of 498 million euros a year earlier, for a very signifi cant improvement of 522 million euros. The healthy generation of free cash fl ow, at 934 million euros, was the result of good operational profi tability and a EMPLOYEES With exports accounting for 80% of its business, Safran in a major international group, although its roots are still largely in France: 64% of its workforce is based in France. TOTAL EMPLOYEES reduction of 317 million euros in working capital requirements. The Group profited from a favorable change in its cash position thanks to business agreements with aircraft manufacturers, the impact of economic stimulus measures by the French government, which accelerated the repayment of certain tax credits, and a signifi cant recovery of receivables. With a gross cash position of 2.1 billion euros and confi rmed, nondrawn credit facilities of 2.4 billion euros at December 31, 2010, Safran has confi rmed its fi nancial development capacity. EMPLOYEES BY JOB TYPE 1 BILLION worth of acquisitions since 2008 1.2 BILLION invested in R&D, equal to nearly 11% of sales, including 637 million euros selffi nanced. Over 300 MILLION invested in production facilities, including the inauguration of four major new plants in 2010. EMPLOYEES BY REGION 0.25 54,900 54,300 64% FRANCE 16% AMERICAS 2008 2009 2010 2009 2010 51% PRODUCTION 20% R&D 11% EUROPE (outside France) 6% ASIA-PACIFIC 29% OTHER 3% AFRICA & MIDDLE EAST 10 11

INVESTOR INFORMATION INVESTOR INFORMATION 2010 CHANGES IN THE SHAREHOLDING STRUCTURE Areva s stake in Safran was significantly reduced, from 7.4% to 2%. For Safran, this helps increase the number of shares available to the public. SAFRAN SHAREHOLDERS AT DECEMBER 31, 2009 30.2% FRENCH STATE 7.4% AREVA 20.1% EMPLOYEES 4.2% TREASURY SHARES 38.1% PUBLIC SAFRAN SHAREHOLDERS AT DECEMBER 31, 2010 30.2% FRENCH STATE 2% AREVA 16% EMPLOYEES 4.2% TREASURY SHARES 47.6% PUBLIC Safran gives shareholders clear, complete and accessible information in line with their requirements, no matter what their level of fi nancial expertise. Specialized teams at Safran create information channels and organize meetings to establish relations of mutual trust, based on local contacts. In 2010, these teams revamped the fi nancial information voice server to enrich its content. It is overseen by management teams from the Group s investor relations department. Membership in the Shareholders Club is open to all individual shareholders. They receive regular information about Safran, in particular through the Shareholders Newsletter, which is available online, and was published more frequently in 2010. Visits to Group plants are also organized, and are open to all club members. In 2010, six half-day visits allowed more than 160 shareholders to get a close-up view of the Group s operations. The Annual General Meeting of Shareholders allows shareholders to discuss issues with corporate management and ask questions. The meeting held on May 27, 2010 included an exhibition of Safran s products and technologies, refl ecting its technological excellence in different markets. This exhibition showcased the broad variety of the Group s business sectors through three stands, dedicated to aircraft engines and equipment, defense and security. Safran also organizes regular meetings with fi nancial analysts and institutional investors from France and abroad, during presentations of fi nancial results, as well as special conferences and seminars. We also organize roadshows and individual meetings, mainly in Europe and the United States, after the publication of annual and half-year results. SAFRAN INVESTOR RELATIONS 2, boulevard du Général Martial Valin, 75724 Paris Cedex 15, France Investor and Analyst contact Phone: + 33 (0)1 40 60 83 53 email: investor.relation@safran.fr Individual shareholders and Shareholders Club contact N Vert : 0 800 17 17 17 email: actionnaire.individuel@safran.fr SAFRAN SHARE PRICE: JANUARY 1 TO DECEMBER 31, 2010 % increase 110 100 Safran CAC 40 26.50 REPAIRING ENGINE PARTS AT THE SUZHOU PLANT IN CHINA 90 80 70 +93.57 % 60 2011 AGENDA 50 40 FINANCIAL AGENDA Annual General Meeting of Shareholders April 21, 2011 Publication of 2011 Q1 results April 28, 2011 Publication of 2011 H1 results July 28, 2011 THE SAFRAN SHARE The Safran share is listed in Compartment A of Euronext Paris, and is eligible for Deferred Payment Service (SRD). Name: SAFRAN ISIN code: FR0000073272 Abbreviation: SAF Index: CAC Large 60 (starting March 21, 2011) 30 20 10 0-10 -20 JAN. 2010 FEB. 2010 MAR. 2010 APR. 2010 MAY 2010 JUNE 2010 JUL. 2010 AUG. 2010 SEPT. 2010 OCT. 2010 NOV. 2010 3,804.78 POINTS -3.34 % DEC. 2010 12 13

STRATEGY ACQUISITION OF L-1 A WORLD LEADER IN SECURITY SOLUTIONS STRATEGY NURTURING GROWTH Safran, as a world leader in high technology, applies an ambitious Research & Technology (R&T) policy designed to ensure vigorous organic growth through increasingly integrated solutions. If needed, this strategy is backed by a targeted mergers & acquisitions policy, to provide or strengthen certain technological building blocks. Safran and L-1 Identity Solutions, a leader in this market in the United States, announced on September 20, 2010 that they had signed an agreement providing for the acquisition by Safran of L-1 s biometric solutions, access control, secure ID document and enrollment service businesses, for a total of $1.09 billion, in cash. This operation, which was to be finalized in the first half of 2011 (pending authorization by American authorities), will create a world leader in high-tech solutions for the booming biometric security market. With the addition of L-1, Safran will increase its security business sales by one-third. It will also help the Group consolidate its positions in the American market, giving it the complete array of technologies needed by any major player in the security sector. Already the world leader in fingerprint recognition, Safran will also acquire this status in iris recognition, and will bolster its production capacity for secure ID documents. From the business standpoint, the acquisition facilitates access to the huge driver s license market in the United States, which is managed by each state individually. Morpho will subsequently have the essential technologies and market access that will enable it to meet its long-term strategic objective of making security the Group s third pillar. FINGERPRINT RECOGNITION 14 15

THE AIRBUS A320NEO WILL BE POWERED BY LEAP-X ENGINES 1979 2016 1.09 100 fi rst fl ight of a CFM56 engine planned fl ight of fi rst LEAP-X engine billion dollars invested in the acquisition of L-1 million euros invested in the new Turbomeca plant LEAP-X CHOSEN FOR AIRBUS A320NEO ACQUISITION OF SNPE MATÉRIAUX ENERGÉTIQUES INAUGURATION OF THE JOSEPH SZYDLOWSKI PLANT STRATEGY THE NEW-GENERATION AIRCRAFT ENGINE On December 1, 2010, Airbus selected the LEAP-X as one of the engines to be offered on its A320neo. After having been chosen by Chinese aircraft manufacturer Comac as the sole Western powerplant on the new C919 jetliner, the LEAP-X is well on its way to replicate the success of its predecessor, the CFM56, which has become the benchmark in aircraft propulsion over the last 25 years. The shift to the new generation is already under way: the LEAP-X will enter service in 2016 on both the new version of the Airbus A320 and on the Chinese airliner. EUROPE CONSOLIDATES ITS SOLID PROPULSION INDUSTRY During the third quarter of the year Safran announced its plan to set up a framework agreement for industrial and commercial collaboration with SNPE, bringing to fruition a project that was considered a pivotal strategic objective for many years, namely, to strengthen the solid rocket motor industry in France and Europe. Solid propulsion is a key to both missiles and launch vehicles, and the two groups already team up on propulsion systems for France s nuclear strategic missile, the M51, and for Europe s Ariane 5 launcher. The agreement between the two groups provides for the acquisition by Safran of SNPE Matériaux Energétiques (SME) and its subsidiaries, including 50% of Roxel, a specialist in tactical propulsion, and 40% in Regulus, a subsidiary specialized in solid rocket motor propellants. Pending the finalization of government procedures, expected in the fi rst half of 2011, this project should enable Safran to establish its position as the world s second leading supplier of solid propulsion systems. The new industrial organization will also give Europe a structured space propulsion industry, including the production of propellants and rocket motors within the same group. In fact, that is exactly how all of Safran s main competitors in this market are already organized. The resulting industrial and contractual simplifi cation will signifi cantly boost industry competitiveness, and will help both the Ariane launcher and tactical missiles win new contracts. The restructured solid propulsion industry, now grouped within Safran, will comprise nearly 3,000 employees, a Research & Development unit with more than 600 scientists and engineers, and total sales estimated at nearly 600 million euros in 2011. INDUSTRIAL EXCELLENCE, FRENCH STYLE Our ongoing international development does not mean that we have stopped investing in France. Safran continues to invest in state-ofthe-art industrial facilities, as shown by Turbomeca s new Joseph Szydlowski plant in Bordes, southwest France, inaugurated last June by French President Nicolas Sarkozy. This new plant represents a total investment of 100 million euros. Turbomeca s new plant will reduce production cycles by 50% and bring design and production teams closer together. Entirely eco-designed, it exceeds the most stringent Health, Safety and Environment (HSE) standards, and is a model of sustainable development. It was conceived with the well-being of future generations in mind, as well as the long-term viability of the enterprise, by anticipating the more restrictive environmental regulations to come. The plant also ensures the company s long-term presence in this region, supporting both employment and skills development, and reflects the Group s commitment to the ongoing growth of the world s leading producer of turbine engines for helicopters. INAUGURATION OF THE NEW TURBOMECA PLANT ARIANE 5 LAUNCH IN KOUROU, FRENCH GUIANA 16 17

RESEARCH & TECHNOLOGY RESEARCH & TECHNOLOGY RISING TO TOMORROW S CHALLENGES Establishing a distinctive technological difference is one of the key competitiveness factors in Safran s business sectors. To maintain our leadership in an environment characterized by increasing global competition, the Group applies a strategy based on proactive Research & Technology. INNOVATION ANCHORED IN CROSS-FUNCTIONAL COMPETENCIES Safran s Research & Technology activities are organized according to a model that fosters the development of synergies. For instance, we have set up a network of experts focused on a dozen main disciplines: mechanics, aerodynamics, composite materials, alloys, electronics, onboard software, sensors and signal processing, systems engineering, etc. Several research centers in France and the United States, for instance, are working on signal processing and imaging techniques. Safran s products for defense optronics, biometrics, explosive detection and critical engine parts, whose quality is certified by non-destructive testing (computed tomography, ultrasound inspection, etc.), benefi t from broad synergies between these teams. Since being created, the Safran group has maintained close ties with academic research. In 2010 we started a new collaboration with the Leti lab at French atomic energy commission CEA, an applied research center for microelectronics and information technology, to work on infrared sensors using indium antimonide (InSb) technology. To convert our research investments into intangible assets, Safran also actively pursues a policy of fi ling for patents, with the total number in our portfolio increasing steadily. New R&D center The new François Hussenot center in Massy, near Paris, consolidates the Group s strengths in electronics and safety-critical software within the Safran Electronics division, forming a world-class R&D hub. 18 19

ASSEMBLING INERTIAL NAVIGATION EQUIPMENT IN A CLEAN ROOM 5th 20% 450 1.2 leading French company in terms of patents published in 2010 (426) of employees work on R&D doctoral scientists work in Safran s research teams billion euros invested in R&D in 2010 (53% self-fi nanced) RESEARCH & TECHNOLOGY GREEN TAXIING: COMBINING ECOLOGY AND ECONOMY Safran has developed a concept that will allow aircraft to taxi, before takeoff and after landing, without using their jet engines. Electric motors powered by the auxiliary power unit (APU), already installed on all planes, will be added to each wheel in the main landing gear, and controlled from the cockpit. This concept will provide fuel savings of up to 5%, while signifi cantly reducing CO 2 and NOx emissions, largely offsetting the additional fuel used due to the weight of the system. Furthermore, since the jet engines won t operate while the plane is on the ground the risk of ingesting debris is greatly reduced. A demonstrator is planned for 2012, with the system entering service in mid-2016. SIMPLER SECURITY CHECKS Morpho s innovative X-ray diffraction technology will revolutionize the luggage inspection process during passenger check-in at airports, by allowing liquids and gels to be inspected, while increasing the detection rate and decreasing the number of false alarms. This highly effective technology provides a precise identifi cation of materials contained in luggage, based on their crystal or molecular structure, offering unprecedented detection performance. Many other technical advances are behind the design of a fast, compact system, especially well suited to these inspection stations. Tomorrow s ceramic low-pressure turbines The use of composite materials is gradually being extended to the entire aircraft, including the engine. In July 2010, Safran tested the fi rst prototype of a low-pressure turbine fi tted with ceramic matrix composite blades. Based on the 3D woven technology developed jointly by Snecma and Snecma Propulsion Solide (the Group s center of excellence in composite materials), these blades are a world fi rst, and a real technology breakthrough that heralds the new generation of turbines to be incorporated in airplanes that will hit the market towards 2018. TAXIING 3D WOVEN COMPOSITE BLADES FOR LEAP-X In December 2010, Snecma carried out the fi rst simulated blade rupture test on a newgeneration fan module. This test is a major milestone in the certifi cation of any jet engine. The fan blades and casing are made of a 3D woven composite material, using the resin transfer molding (RTM) process. RTM involves the injection of a liquid resin between a rigid mold and countermold, to produce 3D composite parts that are both light and strong, and very practical production processes have been developed as well. RTM woven composites are one of the major technological advances incorporated on the new LEAP-X engine. TESTING FAN BLADES ON THE LEAP-X ENGINE 20 21

DEVELOPMENT DEVELOPMENT UNIFIED AND EFFICIENT GROWTH Safran continues to expand, while also building our image and bolstering our structure as a major global enterprise. A UNIFIED WHOLE In 2010 Safran rolled out a new visual identity, designed to spotlight the value of the Group as a unifi ed whole built on its constituent companies. At the same time, we further strengthened the coordination of our international development, based on a unifi ed image and with the aim of greater effi ciency. In the field, we carried out a number of promotional actions for the Group, to support the development of our companies. This support was refl ected in close contacts with local authorities and key personalities, professional associations and think tanks. This strategy also involved, for example, the coordinated implementation of a Group-wide offset policy, along with the management of our internal export control and trade compliance processes. A new company was created in 2010, Safran Mexico. The aim of this type of entity is to bolster our local presence with regional customers, and pool various support functions. We also focused on rationalizing the Group s businesses in the United States and India last year, while organizing major country-level seminars in Russia, Brazil, Mexico, India, Italy and the United Kingdom. New visual identity The Group s new visual identity was unveiled during the Annual General Meeting of Shareholders in 2010. It is based on a modernized Safran logo and a descriptor specifying the three core markets. 22 23

SMART CARDS FOR BANKING More than 54,000 employees worldwide Including 25% outside of Europe Present in more than 50 countries DEVELOPMENT EXPANDING FOUNDATIONS IN SECURITY The security sector has consolidated at a rapid pace over the last few years. Safran is now one of the top three providers of biometric solutions in this market, and is No. 1 worldwide in automated fi ngerprint identifi cation systems (AFIS). With the recent acquisition of L-1 Identity Solutions (pending approval by American authorities), Safran will become the world leader in biometric ID solutions and the detection of dangerous products, adding expertise in critical iris recognition technologies and bolstering its capacities in enrollment systems. The acquisition of Printrak and GE Homeland Protection in 2009, along with L-1 today, confi rm the Group s transatlantic presence. In addition to adding new technological building blocks, the incorporation of L-1 will also facilitate access to the American market, which now accounts for about 40% of global security business. THE UNIQUE ID NUMBER PROGRAM IN INDIA Safran s participation in the Indian program to assign a unique identifi cation number to all residents will accelerate the development of the security market in Asia. The Group has therefore created a dedicated biometric subsidiary, Sagem Morpho Security Pte Ltd., and we have also teamed up with Mahindra Satyam, one of the world s leading providers of information services. The vast Indian ID program is unprecedented worldwide, since it involves the creation and management of a biometric database eventually covering 1.4 billion people a major breakthrough in the security market. Last December, Safran was the fi rst company to contribute its technology for the deduplication of biometric files, enabling the fi rst unique ID number to be issued in India. With more than 1,000 employees, security is already Safran s largest production business in India. Safran makes a wide range of personalized smart cards in the country for a number of applications, including healthcare, biometric identifi cation, transport, banking and mobile phones. Safran s Noida plant turns out one million smart cards a day, sold not only in India, but also exported to many other countries in Asia, Africa and the Middle East. ENROLLING RESIDENTS IN THE INDIAN ID PROGRAM A strategic facility in Mexico Mexico is located in a very strategic position near the United States, the world s leading aviation market. In March 2010, Mexican President Félipe Calderon and Safran CEO Jean- Paul Herteman inaugurated the Group s new site in Querétaro. This site houses two plants, which make components for engines and landing gear used on both Boeing and Airbus jetliners. Already operating in Mexico for more than 20 years, Safran has confi rmed its position as the country s leading aviation industry employer, with 3,000 employees, and consolidated its strategic presence in this prestigious sector. WORKERS AT THE QUERETARO PLANT IN MEXICO 24 25

FRENCH ROOTS, GLOBAL FOOTPRINT Safran has continually expanded to keep pace with the development of global business over the years, and now operates in more than 50 countries around the world. EUROPE 40,653 employees, 75 % of total workforce Countries with more than 10 employees. NORTH AMERICA 8,053 employees, 15% of total workforce DEVELOPMENT NORTH AMERICA 8,053 employees United States 4,330 Mexico 2,708 Canada 1,015 SOUTH AMERICA 804 employees, 1% of total workforce AFRICA / MIDDLE EAST 1,674 employees, 3% of total workforce ASIA / PACIFIC 3,072 employees, 6% of total workforce SOUTH AMERICA 804 employees Brazil 703 Other 101 EUROPE 40,653 employees France 34,482 U.K. 1,985 Belgium 1,448 Germany 990 Russia 288 Other 1,460 AFRICA / MIDDLE EAST 1,674 employees Morocco 1,336 South Africa 246 Other 92 ASIA / PACIFIC 3,072 employees India 1,623 China 670 Singapore 542 Australia 179 Other 58 26 27

IMPROVEMENT INITIATIVES IMPROVEMENT INITIATIVES DYNAMIC TRANSFORMATION Safran pursues its continuous improvement initiatives based on best practices from around the world. These large-scale projects, coordinated by the Group and applied to all of our units, underpin an approach based on ongoing innovation and transformation. They target economic performance, as well as fostering the full-fledged commitment of all employees to continuous improvement. REFINING OUR CONTINUOUS IMPROVEMENT APPROACH Safran s improvement initiative was relaunched two years ago as Safran+, a label that is now widely recognized throughout the Group. Based on continuous improvement efforts, the priority projects coordinated at Group level and overseen by management teams at our companies are deployed simultaneously across the Group, and aim to achieve breakthrough improvements. The corresponding gains are spotlighted, to make sure that the performance achieved in each type of improvement action is visible. The four main improvement objectives are: the development of service sales; the bought-in share of production costs; its internal share; and control over overhead, structural and administrative expenses. At the same time, a major Group project focuses on reducing our working capital requirements and improving cash flow. Another project aims to decrease the Group s exposure to euro/dollar exchange rate fl uctuations. To increase their effectiveness, heads of both improvement initiatives and Group projects received special training in 2010, covering communications techniques, managing change and labor relations, and managing transformation projects. Pooling procurement Non-production purchases have been pooled through the creation of a shared services center, called Safran Purchasing. With this new structure, purchasing between Group companies is now coordinated centrally, while companies have retained their operational responsibility for the purchase of components, products or services needed to make their own products. 28 29

1,900 More than 1,000 250 11.4 THE FINGER ON THE FLY MOBILE FINGERPRINT RECOGNITION SYSTEM WON THE SAFRAN INNOVATION GRAND PRIZE IN 2010 Green Belts and Black Belts, already certifi ed or being trained, are leading projects at Safran Lean projects launched or completed in 2010 employees now consolidated within Safran Purchasing improvement suggestions per person and per year applied at Sagem Industries IMPROVEMENT INITIATIVES MODERNIZATION OF GROUP MANAGEMENT Two types of actions run concurrently: continuous improvement initiatives, coordinated by Group companies within the scope of their own progress plans, and breakthrough or even disruptive concepts, embodied in several projects deployed simultaneously across the Group and coordinated centrally. All Safran entities share the common goals of improving financial performance and stimulating innovation, based on reference standards applied throughout the Group. In line with this approach, various support functions are being modernized to establish new operating modes and an enhanced service culture. For instance, since January 2010 a shared services center has centralized payroll and personnel management for 24,000 employees in France. At the same time, we revamped our in-house university, creating Safran Corporate University to support ongoing changes in our business sectors and develop the skills and expertise of more than 54,000 Group employees. Safran Corporate University focuses its training programs on the Group s strategic challenges and priority skills development objectives for the entire workforce. This is just one way for us to unify our personnel around a shared corporate culture, identity and values. The RTDI (research, technology, development and production engineering) project aims to improve all processes involved in getting a new product to market by 30%. LEAN-SIGMA, A MAJOR IMPROVEMENT LEVER The Lean-Sigma initiative continues to be a major lever for improving the Group s performance. Based on training Green Belts and Black Belts in these two productivity improvement techniques, this initiative now counts nearly 2,000 employees who are undergoing training or have already been certifi ed and they will lead improvements in production, engineering and support functions. COMPETITION DRIVES INNOVATION Safran organizes a yearly competition that rewards the best innovations in fi ve categories: Lean-Sigma, sustainable development, innovation in the fi eld, patented innovation, and product, technology or service innovation. A Safran Grand Prize for Innovation recognizes the most innovative idea of the year. The innovation in the fi eld award for 2010 was jointly awarded by Safran and the business weekly L Usine Nouvelle, while the prize for the best Lean-Sigma project spotlighted the impact of a quality initiative set up in conjunction with a supplier. Supply Chain Safran continues to optimize its supply chain. All Group companies now manage this proactive initiative, sharing common reference standards that were drawn up to place daily supplier relations on a more professional basis. Thanks to actions targeting our suppliers, we have been able to reduce nonquality in half since 2008, while at the same time improving on-time delivery performance by 30%. LEAN TRANSFORMATIONS More than 80 Lean Transformations have been launched in the last two years. These initiatives systematically focus on visual management and use a two-pronged approach: projects implemented locally by companies, in line with the improvement objectives defi ned by Safran; and others carried out at Group level, based on proposals by our companies. KEEPING OVERHEAD, STRUCTURAL AND ADMINISTRATIVE COSTS UNDER CONTROL OPTIMIZING OUR SUPPLY CHAIN 30 31